Oisix ra daichi Inc.
Q4 Financial Results Briefing for the Fiscal Year Ending March 2023
May 11, 2023

Event Summary[Company Name]

Oisix ra daichi Inc.

[Company ID]

3182-QCODE[Event Language]

JPN[Event Type]Earnings Announcement[Event Name]

Q4 Financial Results Briefing for the Fiscal Year Ending March 2023

[Fiscal Period]

FY2023 Q4[Date]

May 11, 2023

[Number of Pages]

44[Time]

16:00 – 17:01(Total: 61 minutes, Presentation: 32 minutes, Q&A: 29 minutes)[Venue]Webcast[Venue Size][Participants][Number of Speakers][Analyst Names]*

1
Kohei Takashima

Representative Director, CEO

Hideki Sumi

Tokai Tokyo Research Institute*Analysts that SCRIPTS Asia was able to identify from the audio who spoke during Q&A.

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Presentation
Takashima: Hello, everyone. I am Takashima from Oisix ra daichi. Thank you very much for joining us today.
My throat is a little irritated from pollen and yellow sand, so I apologize if some parts are difficult to hear. I
will explain the financial results briefly and then move on to the Q&A session.
Regarding the explanation, I would like to talk about three main things. I would like to talk about the last fiscal
year that ended, our strategy for the future, three things about the next fiscal year, and a little bit of somethingelse.

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First, I would like to reflect on last year. The fiscal year ending March 31, 2023, or FY2022, I feel that it has
been a very difficult and notably challenging year in our 20-plus years of management.
First of all, in Q1, we had trouble at the Ebina station location at the beginning of last year, and we spent quite
a lot of time recovering from that, so we were not able to do many marketing activities, and we were working
very hard to recover from the logistics trouble somehow. On the other hand, various prices rose sharply inthe background, and we could not take action to address this in Q1, which led to a deterioration in profitability
in Q1.
In Q2, we have largely completed recovery from the logistics problems and have started structural reforms totake firm measures against this inflation. At the same time, we started the TOB against SHiDAX CORPORATION,
which led to an increase in newspaper coverage, etc., unexpectedly.
As for Q3, we have made much progress in the profit structure reform, and the TOB for SHiDAX wassuccessfully completed.
Q4 progressed as planned while the profit structure reform continued. We were also in a position to begin
discussions constructively with SHiDAX. Finally, for almost the first time in the last fiscal year, we have invested
about JPY1.1 billion in the full-scale promotion and special additional promotion expenses to grow the Oisix
brand.
It was a very difficult year, but things got better and better. Comparing this time last year with this year, I feel
we have improved greatly.
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I would like to look at some of the numbers.
First, as will come up several times today, we ran a promotion campaign in Q4. As I mentioned earlier, theprofit structure has been reformed considerably, and logistics are now in place to allow for large-scale
shipments. Then, when the COVID-19 pandemic situation was very bad, we had a huge increase in customers,
but we were experimenting with ways to promote it after the pandemic had subsided considerably.
Since we had already established this method, we made a management decision to prove that there was room
for solid marketing, and we invested an additional JPY1.1 billion for special promotions in addition to theexisting budget.
As a result, this is the largest number ever for a quarter. Over the period of the pandemic, there was anincrease of 33,000 customers, the largest number ever, to 394,000.
There are two figures: in real terms and in actual terms, but basically, I would like to talk about the figure in
real terms. In spending this JPY1.1 billion, there were several promotional methods that we tried for the firsttime, and as a result, we had a good number of customers who temporarily joined the program but
immediately canceled their membership.
This is a promotional method that needs to be improved, but the number is real after excluding suchcustomers, so we are excluding those who declined immediately after the start of April, but even excluding
them, this was the largest quarterly increase ever.

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Looking back a little longer, ARPU increased significantly during the pandemic, especially in the beginning, andthen gradually declined, but it stopped declining in H2 last year, or rather, it stopped declining at a similarlevel but slightly higher than before the pandemic.
On the other hand, the number of people increased dramatically during the pandemic, and then growthslowed down. After that, as I mentioned, we resumed a promotion campaign from the end of Q3 to Q4, andin Q4, the growth started to accelerate again. This is a recap of what happened last year, or in the longer term,
during the pandemic.

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As a result, last year's performance, as far as sales are concerned, was JPY115 billion, a slight increase. EBITDA
is JPY5.6 billion. If we had not invested in this last promotion, we would have reached our initial forecast, but
as a management decision, we decided to invest in this expense for the next fiscal year, resulting in a total of
JPY5.6 billion.

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6This is the picture based on past trends.

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Now, I will explain sales.
Although there was a slight increase compared to last year, the breakdown shows a slight decrease in themain delivery service. The increase in membership was JPY3 billion, but since the increase in membership wasinevitably skewed toward Q4, the contribution from this was small compared to last year. In contrast, theimpact of the decrease in ARPU slightly exceeded it in the last year’s sales.
Other than that, the US business was much better than expected, but as it is a business that had somewhat
tripled in size compared to pre-pandemic, it decreased by about JPY600 million.
In addition, during and after the pandemic, the support for Tokushimaru Inc and other e-commerce services
continued to grow, and wholesaling to nursery schools, which was difficult during the pandemic, also
recovered.
I would like to skip ahead a bit on the overall numbers. Let’s skip information about individual events andindividual segments, too.

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Now, I would like to talk about our medium-term strategy.
As I originally said, the food and distribution, or the food industry now emit a quarter to a third of the world's
greenhouse gases, which is the largest amount among any industry, and we have a sense of crisis that theearth and the food business cannot be compatible if this situation continues. Our basic strategy is to advocate
sustainable retail by using our business model and technology to provide food that is good for the earth andgood for people together with the earth.

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To elaborate, we have a direct relationship with our producers and customers, and by using direct
relationships and databases and matching them with our own algorithms, we can create a situation in which
the food produced and harvested can be consumed without waste, and customers can consume them fully
without difficulty. This allows us to provide a service that minimizes food loss.

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10Based on that, what kind of things should we think about in the future?
First of all, the green area at the bottom of the page is the sustainable retail business that I mentioned earlier,which has been conducted in the B2C domestic market. In terms of total distribution, it is now JPY125 billion.
What is different from sales is that the total amount of distribution for Tokushimaru, for example, has
increased considerably, but the portion recorded as sales is only a portion of that amount, so there is adifference between our sales and the total amount of distribution.
The total of six brands we are working on now has a total business scale and distribution value of about JPY125
billion. This should be brought to JPY200 billion as soon as possible.
On to B2B. The food service business and B2B subs are still a little over JPY1 billion at present, but we aredetermined to bring this to a three-digit billion as soon as possible.

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I would like to talk about B2C and B2B.
As for B2C, the market itself is very large and growing. It has now grown to nearly JPY3 trillion, and a great
many players have entered the market, including during the pandemic. Since then, the state of the homedelivery market has entered an era of selection, or rather an era of choice, due in part to the lifting of action
restrictions.

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The table below summarizes the positioning.
The vertical axis indicates whether the product is a specialty food or a general food, and the horizontal axis
indicates whether the product is sold on a case-by-case basis or on a subscription basis. We are positioned on
the top right as we deliver specialty food regularly.
In the upper right quadrant, you can see some of our strengths, such as our direct producer network and thedata we have collected on our customers and producers. We also have a supply chain, and although we failed
last year, we have logistics in three temperature zones, which I believe is one of our strengths in this area.

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As I mentioned earlier, the total for all brands is JPY125 billion, and the number of customers who regularly
shop from us is just under 700,000.

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I would like to focus on the Oisix brand. As I mentioned earlier, we ran a promotion campaign in Q4 of lastyear, albeit belatedly, and we saw a sudden increase in customers.

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There were a lot of issues and a lot of waste, and I think we need to reflect on this, but what this has shown
me is that our main target has been families, especially mothers, and fathers of small children.
This time, too, we promoted the product mainly to such a target audience, but because of the large
investment cost, we ended up promoting the product in a way that would reach people other than our target.
As a result, we have been able to gain a good number of customers outside of our target group.
We mainly gained customers in their 60s or so, but we did not customize our products for these people at all,and as a result of simply expanding our promotion target, we saw a considerable increase in this type of
people, which made us think there is much more room for promotion than we thought. This is the finding
from Q4.

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16That was a good thing, but on the other hand, there was also quite a lot of waste that we need to improve, so
now, in Q1, we are working on getting rid of such waste.
The good news is that we were able to gain a very high number of orders through good use of collaboration,
video, and so on. However, the cost was not good, and I believe this is where we need to improve.

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In addition, since our products are now accepted by a wider range of people of all ages, we need to makethem more advanced, so that our customers can cook them more quickly and more easily.
Also, we had good collaborations with Mos Burger and DEAN & DELUCA, which performed very well in Q4, so
we will strengthen the collaborations. And, after all, we are thinking about doing it in a more sustainable way.
This is my overall impression of B2C subs, and then I focused on Oisix in particular.

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Next is this B2B subscriptions, which we are planning to do in earnest starting this fiscal year.
The market size is extremely large: JPY4.5 trillion. It became smaller because of the pandemic, but it is still
about JPY4.5 trillion, and it is expected to recover further after this.
A closer look at the food service industry and market reveal that there are a variety of markets, including
nursery schools, senior citizens, hospitals, boxed lunches, offices, and schools, with some markets growing
and others shrinking. The largest growth is among the elderly.
There are several common challenges, and by far, the biggest challenge is the lack of labor. This is an issue
that the restaurant and catering industry is facing now, too, because there is a market but not enough people
to fill it, so we need something that can be managed by a small number of people.
On the other hand, the cost of labor, ingredients, and materials has skyrocketed, and on the other hand,flexibility in pricing is more limited than in restaurants. Under these restrictions, there are not many major
players in the industry, and even those who are considered major players only control a quarter of the total
market - It is a large market with so many players.

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We have begun to take on the challenge of expanding our business in such a market by taking advantage ofour know-how cultivated in the B2C business. We are doing several things, but as a strategy, we are thinking
about what synergies we can expect, and we can see four major ones right now.
The first is in the area of food procurement, taking advantage of our direct relationships with producers. We
are often told that we sell very expensive products, but we sell quality products at quality prices. On the other
hand, we have a relationship where we are allowed to buy large quantities of good products from certain
producers, and some of them have quite high procurement capabilities, so we can work together to procure
foodstuffs.
I think the second and third points have the main, and we are taking on the challenge of converting our meal
kits, which have always been B2C, to commercial use.
As it says menu in point three, for example, we have a good idea of what kind of dishes children will eat, so ofcourse, this is something we can use elsewhere, and we are wondering if we can solve the labor shortage
situation by using meal kits for commercial use.
The fourth is mutual promotion. For example, nursery schools have a very high affinity with our customers,
so we are thinking of promoting our products to them.

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For example, in the case of school lunches at day-care centers, conventionally, the labor cost of cooking theingredients after the purchase is added comes on top of the cost of ingredients, but using our meal kits, they
can reduce the costs by up to 20%.
We are finding that we can lower labor costs, which will likely lower the total cost while the cost of food goesup. We hope that by leveraging this approach, we can grow this business quickly.

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In addition, we are collaborating with SHiDAX, and it will be in full swing in various aspects from now on.
The case I mentioned earlier is a nursery school making its own meals, but we are planning to conduct various
experiments based on the hypothesis that this commercial meal kit will be effective not only for nurseryschools but also for those who make meals on consignment, such as SHiDAX.

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As you can see here, I will talk about the performance impact that SHiDAX will have on us.
First, there are two major effects of the equity method: the profit of SHiDAX will be consolidated for its share,
and on the other hand, the amortization of goodwill will be recorded. When comparing A and B, the equity inearnings is expected to be slightly positive in the last quarter, Q4. Another impact is the dividend income.
This is the explanation of the current performance impact, but I believe that we will be doing various
collaborations in the future. What synergies will result from this will be calculated in the future.

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I would like to briefly discuss two remaining medium-term matters: sustainability and profitability.
In terms of sustainability, our company is very focused on food loss. Originally, food loss as a distributor wasvery low; even in the past year, it was very low, about 0.2%.

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Last year, we also tried to reduce food loss in the area of producing and eating food, especially upcycling in
the area of producing. It is an initiative of upcycling, in which ingredients that are produced during foodprocessing and normally thrown away are converted into food products and sold, which are generated in theprocess of producing food.
Also, there has been quite a lot of progress and more collaborations, etc. In the last year, we have reduced
the amount of food loss by about 300 tons.

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We are also using food tech to sell plant-based protein to reduce greenhouse gas emissions from animal
protein, as well as food loss, and are supporting such players by investing in them through our fund.

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In addition, we are also working on carbon neutrality in our materials.
In the last year, we were able to reduce our own emissions by about 70%, and this is something our customers
have often pointed out, but we have reduced the amount of plastic we use by about half, and we would liketo continue to reduce it further.

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I would also like to briefly talk about profitability.
As for the cost of sales, it improved by about 1% in last year's profit improvement. It is also the case that the
Food Rescue Center has been successfully launched, and it is making a bit of an impact.
I think we can improve by about 2 points in the future through further improvements in Food Rescue Centerand in-house manufacturing. We are treading on the idea that we can improve it by about 2 points over the
next two years.

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Then there is logistics. H1 last year was to normalize what had gone up very much due to the failure in Ebina,
and H2 of last year was to solemnly improve and lower costs after normalization, and we did well until H2 lastyear.
After this, while Ebina is a refrigerated station, there is a frozen station in Atsugi, and this will be completed
next year. Based on last year's failure in Ebina, we want to be cautious. Temporarily, speaking in that sense,
the cost of refrigeration will continue to decline a bit from here on out. As for the frozen stations, we areplanning to relocate them, so they will go up temporarily, and then we will make improvements again; so, in
total, we think we can lower costs by about 1 point from now and even more in the logistics area.

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29This is Atsugi.
We plan to start the work around the end of this year and finish it by this time next year. We don't have theoption of not doing it because we are running out of capacity, although cost is important, too, but at the sametime, we want to increase productivity.

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As I explained, EBITDA for the last full year, excluding the special additional promotion expenses for the last
fiscal year, was about a little less than 6% for the full year, but we would like to bring it to a little more than
6% for this fiscal year and eventually challenge the 10% target without changing.

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Finally, I would like to share our plans for this fiscal year.
As for sales, we will continue to grow by double digits at JPY126.5 billion. As for EBITDA, we plan to achieve
JPY8 billion. We made a lot of progress in reforming our profit structure last year, but H1 was pretty bad, sothat didn’t make good numbers for the full year. As for the current fiscal year, we are firmly committed todoing so throughout H1 and the full year. We would like to challenge ourselves to achieve an EBITDA of JPY8
billion as a result. As for net income, it will be JPY3.8 billion.

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32And in terms of headcount, we are targeting 564,000 subscribers.
As for Oisix, we had a sharp increase in Q4, but after that, there was a sharp decline in the number ofcustomers, and there were some customers for whom the cost of Oisix was not worth it. We are working on
tuning up and will then try to increase the number once again.

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Finally, I would like to introduce some topics.
First of all, and today is probably the first announcement, we have reached an agreement with Agrigate Co.,
Ltd., which operates Shunpachi Fruits and Vegetables, a venture company that operates real fruit andvegetable stores, to first acquire about 20% of its shares, with the assumption that it will become a subsidiaryin the future.
We already know that there are several synergies, and the members are very close to each other, but I believethat we will become stronger by acquiring the strengths of this team, especially in terms of strengthening our
procurement.

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34This one here is to share with you that the induction ceremony in the field has received a great deal of
television coverage.

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The rest is what we have been supporting all along.
We have also provided support in Ukraine. Also, WeSupport Family, which supports single-parent households,
is expanding, and we have served a cumulative total of 3.3 million meals.
In fact, we have a lot of food companies that are willing to cooperate with us in providing support, but there
is a problem the target of support is not well visualized, but even so, the number is increasing greatly, and wewould like to continue this in order to be of service to the society.
I apologize for being very difficult to hear. That's all from me. Thank you very much.

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Question & Answer

Shibamoto [M]: Now, let's move on to the question & answer session.
When you ask a question, please start by stating your company name and your name. Each person can ask up
to two questions.
Mr. Sumi, please go ahead.
Sumi [Q]: Hello. This is Sumi from the Tokai Tokyo Research Institute. Thank you. I would like to ask twoquestions from me.
First of all, I would like to ask you about your perception of the external environment going forward. I believethat even at this stage, various companies are raising wages, but I would like to know what you expect theusage rate and churn rate of the working households that are the main target of your Oisix business to be.
If you see such wage increases, I would like to ask you first about the current and future impact on the buying
power of your products, such as whether you are worried about a decline in the premiums on your products.
Regarding the second point, I would like to ask you about your B2B business forecast for the current year andthe outlook for the future. I believe that the sales forecast for this year is JPY19 billion, which is an increase ofabout 6% in YoY terms. I would first like to ask for your view on the impact of this area this year.
One more point, you mentioned that you would conduct test marketing in cooperation with SHiDAX, but what
exactly will you be doing in the future, and what kind of development are you planning?
If you expand in the future, how do you envision the risk of insufficient capacity in production when you
expand explosively in terms of procurement and the capacity of producers? It’s been a long question, but I
would like to ask about those two points.
Takashima [A]: Thank you very much. I got the impression that you had a lot of questions within the twoquestions, but I would like to talk about them one at a time.
The first is about the external environment. As for the current churn rate, changes in the external environment
have not had much of an impact on it. The impact of this was felt in the first quarter. I mentioned earlier that
we launched a large number of promotions in Q4, but when you launch a large number of promotions, youinevitably capture customers who are less inclined to buy, too, and this is affecting Q1 now.
In that sense, the impact of the promotion has been significant, and we have learned that there are needs not
only among households with children, so at this stage, I think it is important to target a wide range ofhouseholds with a high purchasing motivation.
On the other hand, although there have been considerable wage hikes when the market environment in the
US worsens, a savings mentality somehow emerges, even though there is nothing to prevent it, and I think weneed to be prepared for this.
In this sense, I believe that our current sustainability efforts are very effective. By delivering to customers
products that would otherwise have been disposed of, but are still edible, we can create products that makeproducers happy and customers happy with the price.

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We are not talking about food loss to save money now, but by working on such things, when the environment
has changed, we would like to create products that our customers would think are a wise choice for theirbudget.
The second is about B2B. This is still very small, about JPY100 million per month at the beginning of the month.
In terms of business for nursery schools, the initial monthly amount would be about JPY100 million. We would
like to bring this to about JPY200 million. Since that is the scale of the business in 2024, I think that its ratio in
the whole business in the fiscal year ending March 31, 2024, will be very slight. But if we can prove that thiscommercial meal kit will work in that daycare center, I think we will be able to accelerate beyond that.
As I mentioned earlier, what we are trying to do now with SHiDAX is to provide meal kits to nursery schoolsthat prepare the meals at school, and SHiDAX is the company that's commissioned to do it.
We want to try and find out whether that would work for SHiDAX, which has been entrusted with the project.
We will experiment to see if SHiDAX's operations can be made more cost-effective by using these commercial
meal kits or if we can make it possible to avoid having to hire so many people because we are always facing
human resource shortages and are working very hard to recruit them.
We are starting with nursery schools, and since SHiDAX also has a nursery school business, I think it would beeasiest for us to start with that, and we can also expand into other areas, such as facilities for the elderly.
However, as SHiDAX plans to hold financial results meeting this month, we cannot say anything about thisahead of time, so we will proceed with various discussions.
In the short term, you are right about the capacity of producers, and it will be important to explore new
producers with the help of Agrigate, which runs Shunpachi, which I mentioned earlier.
In the medium term, the Ministry of Agriculture, Forestry, and Fisheries (MAFF) is also working on a national
policy to reduce the use of pesticides and chemical fertilizers in order to minimize greenhouse gas emissions.
We expect that the number of producers who produce products that meet our standards will increase
considerably in the future, and we believe that we need to create a market that can serve as a receptacle forthis growing number of producers. That is all from me. Thank you for your questions.
Sumi [M]: Thank you. That’s all from me.
Shibamoto [M]: Thank you very much, Mr. Sumi. We’re moving on to the next question.
Sato [Q]: I am Sato from NIKKEI. Let me ask you two questions.
The first is about the measure taken for inflation, as you mentioned in your explanation. There have been
price hikes, mainly for foodstuffs, and I believe your company has been directly affected by these price hikes.
I would like to know how you are passing on prices and what measures you are considering for the future.
Second, I would like to ask you about the investment in Agrigate that was announced today. I understand thatyou are also aiming to make it a subsidiary in the future, perhaps in the fall. Specifically, you mentioned earlier
the strengthening of procurement, but I would like to know more about how this will benefit the Oisix businessthat you are currently engaged in. Thank you.
Takashima [A]: Thank you, Mr. Sato. Answer.
In terms of inflation, the prices of various raw materials have increased, but we originally, and not by chance,
use relatively more domestically produced raw materials than other companies in the food industry in general.

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In this sense, we are glad that the impact on our business is relatively small compared to those on othercompanies and the food industry in general. Even so, it is not a situation that can be taken lightly, of course,
but that is the relative background of the situation.
In this context, we will raise prices, but in our case, we are in the business of buying products directly in-houseand delivering them to customers. We have been in the business of buying food, vegetables, and ingredientsand selling them as they were when we were originally the founder, but we are now in the business of making
various processed products in-house, such as meal kits, frozen foods, and so on.
For example, when there is an overabundance of produce, the amount that can be sold immediately as
ingredients is about this much, but we have begun having all the rest once put into our Food Rescue Centerand using them as frozen foods or as ingredients in meal kits.
Of course, this will not have the impact that we had originally expected due to inflation, but having started
this just last year, we are getting much better about the cost structure of raw materials, and we think we canmake it even better.
In terms of price, we have not only the price for the product but also the shipping fee structure and various
other additional services, such as the unlimited milk service, so we are reviewing the prices of these additional
services. Also, we will review the conditions and raise the bar a bit on shipping. For example, and we did suchthings last year and will do it again this year. We would like to make improvements in a way that does notaffect customers negatively as much as possible.
We feel that so far, we have been able to do this very well and that the side effects of this change in price andservice structure have been kept under control and better than our expectations.
Agrigate, I don't know how to put it, has a lot of contacts with active producers, especially in the short term.
They have a strong network with fruit-growing regions, while Oisix, in the recent past, has been focusing on
developing vegetable-growing regions for the ingredients of kits and frozen foods rather than fruit, as I
mentioned.
We are in a situation where we have had a bit of an issue with fruit, so in the very short term, we are hoping
to work with Agrigate to strengthen fruit first, and Aggregate members will work using our business cards aswell. That's all from me.
Sato [M]: Thank you.
Shibamoto [M]: Thank you very much, Mr. Sato. We’re moving on to the next question.
Igarashi [Q]: Thank you. My name is Igarashi of Daiwa Securities Co. I have two questions too.
First, I would like to ask you to be a little more specific about how you are going to change the way you do
promotions this term. I understand that you have been aware of some of the issues that have arisen since
January and that there are some areas that are still under consideration, but I would like to know more about
the specifics, along with how promotional expenses will be used.
My second question is about your thoughts on what kind of balance between membership acquisition and
ARPU growth you would like to achieve in the future.
In particular, while ARPU has declined from its peak in the pandemic, I believe it is still high compared to prepandemic levels. I would also like to know if there is any possibility of ARPU declining accordingly, based on
the temporary increase in membership, etc., from the promotions mentioned earlier. Thanks.

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Takashima [A]: Yes, thank you. The first big thing about PR is that last year we didn't do much PR in Q1 andQ2 last year. There was also the problem with the center and the fact that we were not profitable, so we were
not able to do much promotion because we could not make a profit even if we did. We started experimenting
in around Q3 and spent a lot of money in Q4, and that was how last year went.
It is not a good idea to promote only in Q4, of course, considering the full-year results, so our major policy forthis year is to obtain more leveled sales throughout the year.
In the midst of all this, there were a few things that we found out last year during Q4 when we did some pretty
wild promotions. In particular, we found that collaboration was very effective, and we will probably do a lotof collaborations with various brands in the future this year.
We had not been keen on collaboration for promotion but had been doing various collaborations as new
products for existing customers. Not all collaborations are effective in promotion, but now that we know that
there are some effective patterns, we will increase the number of such collaborations.
On the other hand, we have done a lot of very wasteful promotions, and although the number of customers
has increased, it has cost us a lot of money, and the major policy here is to narrow down the promotions
considerably.
Regarding ARPU, our overall policy is to prioritize the number of customers over ARPU, and even if ARPU does
not increase much, we would like to improve profitability to such an extent that profitability improvement
will increase profit margins.
Our target is to maintain ARPU, and in terms of comparison between before the pandemic and now, I think
the price increase is still quite significant. In effect, the situation has not changed that much in terms of thenumber of purchases.
However, the way customers buy will change considerably in the future. For example, they will go from buying
vegetables, meat, and fish separately, as they have done in the past, to buying two or three meal kits andfrom buying five or six JPY300 or JPY400 items to buying two or three JPY1,000 or JPY1,200 items.
In the current fiscal year, we will continue to strengthen meal kits and frozen foods, so although the numberof items purchased by customers will decrease, the unit price per item purchased will be higher, so we hopeto maintain the ARPU as a whole.
Considering the maintenance of ARPU as the number of customers increases in the future, our strategy isbased on the hypothesis that increasing the number of products that can be prepared in less time and taste
better, and achieving the same ARPU with fewer items, will be effective for the growing number of customers
in the future. That's all from me.
Igarashi [M]: Thank you.
Shibamoto [M]: Thank you very much, Mr. Igarashi. We’re moving on to the next question.
Saito [Q]: I'm Saito from [inaudible]. I would like to ask two questions.
This is a follow-up to an earlier question regarding the promotion in Q4. I think you mentioned earlier thatcollaborations had worked quite well, but other than that, has the use of YouTube and offline media that havenot been used in the past, including newspapers, expanded the customer base and made it work?

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Or did you use the media you had used before and expanded the target audience rather than narrowing it
down, and you caught people outside the target audience unexpectedly? If you could comment a little moreon that, please?
Also, CAC went up quite a bit in Q4, but could you tell me your estimation for this fiscal year?
My second question is regarding guidance. I think there was a bridge for net income in the presentation, but
the assumption is that in the period that ended in non-operating income, there was a loss on that investment
partnership of JPY360 million, and those negatives are basically going to continue. The non-operating loss wasmore than JPY600 million last year, and the equity method is expected to increase by JPY200 million, probably
due to SHiDAX, and other things are not supposed to change much. I wonder if you could explain more aboutit.
Takashima [A]: Yes, thank you. Regarding your first question, I would say that you are right. There are twothings, and one is that I think it was significant that we used offline media. This led to both sides, and there
were good and bad sides: the side where many segments of customers joined and the type of offline media
that was very expensive in terms of cost.
Another thing was that we gave a lot of incentives to join. We provided a very strong incentive to join the
program, like "we'll give you thousands of points now," and it resulted in a broadening of the segment, so we
didn't really use a lot of new online channels.
The online side of the channel is not that new, but when we made the incentives stronger than before, we
found that there were many different people there, which is both good and bad. We are currently working on
a tune-up that will make this area more efficient.
In that sense, the CAC rose considerably in Q4 to about double the normal level, and we are now trying to see
how much we can get when we return it to the previous level for Q1 this year. We do not think it is too likelythat the poor CAC will remain for a long time.
And then the non-operating side, it's not like there is something that happens every year. It's not the samething all the time, but in the last year, we have invested in a few startups, especially a company called Nihon
Agri, Inc., which is consolidated, and we are exporting agricultural products. The company had been
wholesaling to overseas department stores, but due to the impact of the pandemic, the overseas department
stores had lockdowns, and as a result, we recorded the loss. The company has been growing since the end of
the pandemic, but we sometimes experience such an event.
There are some such companies, such as Nihon Agri, and I think we need to always expect the same amountof loss. It does not mean that there is anything specific that we are already anticipating, but we expect thatsomething of that magnitude will happen somewhere every year. I hope this answers your question. Thankyou.
Saito [Q]: When I hear it, it sounds like it acts like a buffer.
Takashima [A]: Yes. It's a buffer, but it's like hitting that buffer.
Saito [Q]: I understand.
Takashima [A]: That is how it turned out last year.
Saito [M]: Thank you very much.

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Takashima [M]: Thank you.
Shibamoto [M]: Thank you very much, Mr. [Mori]. As there is no question left, we will now conclude thebriefing. Thank you very much for taking time out of your busy schedule to join us today. Goodbye.
Takashima [M]: Thank you very much.
[END]______________
Document Notes
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